Annuity having interest rate coupled to a referenced interest rate

ABSTRACT

The disclosure herein provides a guaranteed rate of return for a guarantee period of a financial account while at the same time providing upward adjustments to the interest rate if there is a corresponding increase in a specified referenced rate. The guaranteed base interest rate is set at the beginning of the guarantee period, which is credited to an account for an initial pre-defined period. Periodically, the then-current referenced rate is compared to a base referenced rate defined at the establishment of the guarantee period. If the referenced rate has increased, the interest rate that will be credited to the account value will increase by an amount that is based on the amount of increase in the referenced rate. If the referenced rate has not changed or has decreased, the interest rate that will be credited to the account value will be the guaranteed base interest rate.

CROSS-REFERENCE TO RELATED APPLICATIONS

This application is a continuation of U.S. application Ser. No.13/234,887, filed Sep. 16, 2011, which is a continuation of U.S.application Ser. No. 12/689,872, filed Jan. 19, 2010, now U.S. Pat. No.8,036,968, issued Oct. 11, 2011, which is a continuation of U.S.application Ser. No. 11/945,005, filed Nov. 26, 2007, now U.S. Pat. No.7,676,414, issued Mar. 9, 2010, which is a continuation of U.S.application Ser. No. 11/847,077, filed Aug. 29, 2007, now U.S. Pat. No.7,613,644, issued Nov. 3, 2009 which is a continuation of U.S.application Ser. No. 11/420,892, filed May 30, 2006, abandoned, which isa continuation of U.S. application Ser. No. 10/108,262, filed Mar. 28,2002, now U.S. Pat. No. 7,080,032, issued Jul. 18, 2006, the disclosuresand contents of which are hereby incorporated by reference in theirentirety.

FIELD OF THE INVENTION

The present invention relates to an annuity and a method for managing anannuity that provides a guaranteed interest rate. More specifically, theinvention relates to a method in which the guaranteed rate of interestpaid on the principal of an annuity may increase in conjunction withincreases in a referenced interest rate.

BACKGROUND

An annuity is a well-known financial vehicle used to pay a person acertain sum of money in a series of distributions made at regularintervals, such as monthly or annually, based on a given amount ofprincipal consisting of an initial contribution of assets and anysubsequent contributions and the appreciation (or depreciation) of thecontributions. Annuities are characterized by an accumulation phase anda payout phase. During the accumulation phase, the annuity owner makesone or more purchase payments toward the value of the annuity account,and the annuity account value fluctuates, hopefully upwardly, based onthe performance of one or more investment alternatives to which theaccount value is allocated. During the payout phase, the account valueis applied to an income plan of the annuity owner's choosing under whichthe owner, or the owner's designee, will receive a specified number ofincome payments or income payments for a specified period.

Income plans are available in many forms. For example, the distributionsmay be made for a predetermined definite period, as in an annuitycertain, or for as long as the person lives, as in a life annuity.Payments under a life annuity may terminate on the policy holder'sdeath, as in a straight life annuity, or may continue to a beneficiaryfor a specified period after the policy holder's death, as in a lifeannuity with period certain. Alternatively, a life annuity may be basedon two lives jointly, as in a joint and last-survivor annuity in whichpayments continue to be made to the survivor for the remainder of his orher life, or may provide a beneficiary a lump sum payment upon the deathof the policy holder. The payments under an annuity may be set to beginon the purchase date of the annuity, as in an immediate annuity, orafter a specified amount of time, as in a deferred annuity.

During the accumulation phase, the account value may be allocated to afixed account or a variable account, or different portions of theaccount value can be allocated to fixed and variable accounts. In avariable account, the allocated proceeds are invested in non-guaranteedinvestment instruments, such as equities (stocks), bonds, money marketfunds, or mutual funds that invest in one or more of these instruments.In a fixed account, a fixed, guaranteed interest rate is credited to theallocated proceeds, and the rate is usually guaranteed for a finiteduration known as the guarantee period.

Because the interest rate of a fixed annuity is locked in for theguarantee period, contract holders feel disadvantaged if prevailinginterest rates available in other investment products increase duringthe guarantee period while the fixed annuity is locked in at a lowerrate. For this reason, fixed annuities are not a desirable investmentoption for many consumers of investment products; the consumers fearbeing locked into an interest rate that may, during the guaranteeperiod, be lower than prevailing interest rates available in otherinvestment products.

Variable annuities obviate this problem because the variable annuity isnot locked into a guaranteed interest rate. Through a variable annuity,the contract holder can participate in bond, equity, and money marketsand thereby reap the benefits of upturns in those markets. On the otherhand, such investments involve more risk and volatility than guaranteedfixed annuities, and, in addition to reaping the benefits of upturns,the contract holder must suffer through downturns in the marketsunderlying the variable account as well. Accordingly, variable annuitiesmay not be desirable for some investors, especially investors operatingunder relatively short investment time horizons.

Therefore, a need exists for an annuity that provides guaranteedreturns, as in a fixed annuity, while offering the possibility of higherreturns without risk to principal.

SUMMARY OF THE INVENTION

The present invention provides a method of managing an annuity wherebythe contract holder is provided a guaranteed rate of return, while atthe same time allowing the rate of return to increase if there arecorresponding increases in a referenced interest rate to which theannuity account is linked. The referenced rate is a known rate whichprovides a benchmark that is readily accessible to both the contractholder and a potential annuity consumer. Referenced rates may include,for example, United States Treasury rates or interest rates used tosettle contracts traded on financial futures exchanges. There are nomysterious formulae tied to indices or benchmarks that are obscure tothe typical annuity consumer for calculating the interest rate to beapplied to the account. The annuity account managed in accordance withthe present invention is fixed in the sense that the contract holderwill receive a guaranteed interest rate below which the applied interestrate will not fall during the guarantee period, but is flexible in thesense that the contract holder will enjoy the benefit of upturns in thereferenced rate to which the account is linked.

More specifically, according to one aspect of the invention, a method ofadministering an annuity account comprises defining a base interestrate, the base interest rate being applied to the value of the accountfor an initial predefined period, defining a base referenced rate, whichmay be a specified United States Treasury rate as of a specified date,and for each subsequent predefined period following the initial period:(1) determining the current referenced rate, which is the specifiedUnited States Treasury rate on the date that the current referenced rateis determined; and (2) defining a total interest rate that will beapplied to the value of the account during that subsequent predefinedperiod, wherein: (a) if the current referenced rate is less than orequal to the base referenced rate, the total interest rate will be equalto the base interest rate; and (b) if the current referenced rate isgreater than the base referenced rate, the total interest rate will bethe sum of the base referenced rate and an interest rate enhancementthat is determined based on the difference between the currentreferenced rate and the base referenced rate.

According to another aspect of the invention, an annuity comprises abase interest rate, a guarantee period, and an interest enhancementlinked to a referenced rate, such as a specified United States Treasuryrate. During the guarantee period the interest credited to the value ofan account of the annuity will not be less than the base interest rate.The interest enhancement is calculated periodically throughout theguarantee period and is based on changes in the referenced rate from abase value of the referenced rate defined when the account isestablished. If the referenced rate on the date the interest enhancementis calculated is not greater than the base value of the referenced rate,the interest enhancement is zero. If the referenced rate on the date theinterest enhancement is calculated is greater than the base value of thereferenced rate, the interest enhancement is calculated by taking thedifference between: (1) the referenced rate on the date the interestenhancement is calculated and (2) the base value of the referenced rate,and multiplying the difference by an upside participation factor. Aninterest rate that is credited to the account of the annuity after theinterest enhancement is calculated is the sum of the base interest rateand the interest enhancement.

As an alternative to a specified Treasury rate, the referenced rate maybe an interest rate used to settle a contract that is traded on afinancial futures exchange.

Accordingly, during the guarantee period, which, in a preferredembodiment, is five years, the interest rate will never fall below thebase interest rate set at the beginning of the guarantee period, andperiodically, preferably annually, the interest rate is adjustedupwardly if there is a corresponding increase in the referenced rate.

With these and other objects, advantages and features of the inventionthat may become hereinafter apparent, the nature of the invention may bemore clearly understood by reference to the following detaileddescription of the invention, the appended claims and to the severaldrawings attached herein.

BRIEF DESCRIPTION OF THE DRAWINGS

The invention will be described in detail with reference to thefollowing drawings, in which:

FIG. 1 is a flow chart schematically illustrating the steps taken inmanaging the annuity contract of the present invention.

FIG. 2 is an exemplary table illustrating the management of the annuitycontract of the present invention.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS

Management of the annuity contract of the present invention isschematically illustrated in FIG. 1. The annuity contract may bepurchased from an authorized agent for an initial contribution (known asa purchase payment). The contract preferably has a specified timeduration (known as the guarantee period) which most preferably is fiveyears from the date of initial purchase.

The contract preferably guarantees a competitive fixed interest rateplus participation in upward movements in a specified referencedinterest rate, such as a specified Treasury rate, after issue. Thecustomer value in this is that they don't lock into a fixed rateinvestment that pays a relatively low rate of return for many years.

The crediting formula for growth of the annuity account is preferablydefined as a rolling base interest rate (i_(B)) guaranteed for aspecified duration, preferably five years, although other specifieddurations could be defined. As indicated, the base interest rate isguaranteed for the specified duration (i.e., the guarantee period); thatis, the interest rate paid on the account value will not fall below thebase rate during the specified duration. The guaranteed base rate ispreferably a rolling rate for the specified duration, meaning thatsubsequent contributions made to the annuity account are treated asindependent sub-accounts and each will be credited with a new, andpossibly different, base rate determined when the contribution is madeand that base rate will be guaranteed for the specified duration (e.g.,five years) from the date of the subsequent contribution.

There are less preferred alternatives to employing a rolling interestrate and creating a new sub-account for each purchase payment made afterthe contact is established. For example, subsequent purchase paymentsmay be prohibited in an established contract. Thus, each purchasepayment constitutes an initial purchase payment establishing a newannuity contract. Alternatively, subsequent purchase payments into theaccount may be subject to the base interest rate defined when thecontract is first established and may not change the termination date ofthe guarantee period. Thus, all purchase payments under the contractwould contribute to the value of the same “account.”

In the context of the remaining description, unless otherwise stated,the term “account” will apply to any of the alternatives described aboveand obvious variations thereof. Thus, “account” may mean an account intowhich no subsequent purchase payments may be made, an account in whichsubsequent purchase payments are subject to the same base interest rateand do not affect the termination date of the guarantee period, or asub-account with an associated base interest rate and guarantee periodestablished by each purchase payment.

A new account commences (step 10 in FIG. 1) with a purchase payment, andeach account has its own guaranteed base interest rate (i_(B)) andguarantee period commencing on the date of the purchase payment. Thebase interest rate is set in accordance with known methods and analysesbased on prevailing market conditions.

Each account is credited with the corresponding base interest rate foran initial pre-defined period, which is some portion of the guaranteeperiod. For example, where the guarantee period is five years, theduration may be divided into five pre-defined periods of one year each.Other pre-defined periods may be employed, for example semi-annual,monthly, bi-monthly, bi-annual, etc.

At the time a base interest rate is defined, a base value of areferenced interest rate is defined. This base value of the referencedinterest rate will be referred to as the “base referenced rate” (R_(B))(step 20 in FIG. 1). In the preferred embodiment, the referenced rate isa specified United States Treasury yield rate, and most preferably isthe five-year Constant Maturity United States Treasury yield (hereafter,the five-year U.S. Treasury rate). Other Treasury rates which could beemployed in the present invention include the five-year “on-the-run”Treasury rate, the 10-year Treasury rate, and rates on other Treasurynotes or bonds which bear a stated interest rate.

Alternatively, the referenced rate may be the interest rate used tosettle any contract that is traded on a financial futures exchange as ofa specified date. Examples of such rates include swap rates, Eurodollarrates, and the London Interbank Offer Rate (“LIBOR”). Examples offinancial futures exchanges include the Chicago Mercantile Exchange(“CME”), the Chicago Board of Trade (“CBOT”), the London InternationalFinancial Futures Exchange (“LIFFE”), and the Singapore ExchangeLimited.

The base referenced rate may be the referenced interest rate on any datethat may be specified in accordance with the annuity contract. Forexample, the base referenced rate may be the closing rate on the datethe contract is established or the closing rate on the trading dayimmediately preceding the date the contract is established. It may bethe closing rate on the first trading day of the month or year in whichthe contract is established. The referenced rate may be a snap-shotvalue, or it may be a rate averaged over a predefined period (e.g., day,week, month, year) preceding or encompassing the date on which thecontract is established.

An upside participation rate (“UPR”) is also defined (step 25 in FIG. 1)at the time the base interest rate is defined. The function of the UPRwill be described below.

The base interest rate (i_(B)) is set (step 30 in FIG. 1) in accordancewith factors such as prevailing market conditions in effect at the timethe base interest rate is set, anticipated hedge positions for theannuity underwriter, etc. The considerations, analyses, and methodologyfor setting the base interest rate for the current invention arepreferably the same considerations, analyses, and methodology that wouldbe used in setting the interest rate for a conventional fixed accountannuity and will not be explained in detail herein as they would bereadily appreciated by those of ordinary skill in the art. It ispreferred, however, that the base interest rate be set at a level belowthe guaranteed interest rate that would be set for a comparableconventional fixed annuity with a comparable guarantee period. As willbe explained in more detail below, the annuity owner will enjoy thebenefits of periodic upturns in the referenced rate, but will not sufferin the event of downturns in the referenced rate because the baseinterest rate (i_(B)) is guaranteed for the guarantee period.Accordingly, it is preferable to set the base interest rate somewhatlower than the base interest rate for a comparable conventional fixedannuity to recover the costs of providing interest enhancementscorresponding to upturns in the referenced rate.

The actual base interest rate may be set based on the size of theaccount, with large accounts exceeding a pre-defined threshold beingcredited with a higher base interest rate (e.g., 0-25 basis points belowa comparable conventional fixed account interest rate) as compared tothe base interest rate credited to accounts that do not exceed thepre-defined threshold (e.g., 50-60 basis points below a comparableconventional fixed account interest rate). Two or more account thresholdtiers may be defined for a corresponding base interest rate tier.

Alternatively, the base interest rate for all accounts may be identical,with certain upward interest rate adjustments made for account valuesexceeding predefined thresholds as of the date the guarantee period forthat account was established. So long as the account value exceeds thepre-defined threshold, the total guaranteed interest rate will be thebase interest rate plus the upward adjustment, and the guaranteedinterest rate may exceed the base referenced rate. If the value of theaccount falls below the predefined threshold, for example because ofwithdrawals by the contract holder, the total guaranteed interest ratewill be the base interest rate, and the policy holder will still be ableto participate in upward changes in the referenced interest rate.

A total interest rate (i_(T)), which for the first predefined period(e.g., the first year) is the base interest rate (i_(B)) (step 40 ofFIG. 1), is credited to the account for the pre-defined period (step 50of FIG. 1).

At the end of the pre-defined period, (e.g., at the anniversary of thepurchase payment), provided the guarantee period has not come to an end(step 60 of FIG. 1), the referenced interest rate (e.g., the specifiedU.S. Treasury rate), referred to as the current referenced rate (R_(C)),is determined (step 80 of FIG. 1), and the current referenced rate iscompared to the base referenced rate (step 130 of FIG. 1) to determinean interest enhancement i_(E).

The current referenced rate may be the referenced interest rate on anydate that may be specified in accordance with the annuity contract. Forexample, the current referenced rate may be the closing rate on the datethe current referenced rate is determined or the closing rate on thetrading day immediately preceding the date the current referenced rateis determined. It may be the closing rate on the first trading day ofthe month or year in which the current referenced rate is determined.The referenced rate may be a snap-shot value or a rate averaged over apredefined period (e.g., day, week, month, year) preceding orencompassing the date on which the current referenced rate isdetermined. In the preferred embodiment, the date on which the currentreferenced rate is determined is each anniversary of the initialpurchase payment.

Alternatively, the date on which the current referenced rate isdetermined may be a preceding date on which the referenced rate washighest. For example, if on the first anniversary of the initialpurchase payment the referenced rate is 7% and on the second anniversarythe referenced rate is 6%, the date on which the current referenced rateis determined on the second anniversary will be the first anniversary,and the current referenced rate will be 7%. If on the third anniversarythe referenced rate is 7.5%, the date on which the current referencedrate is determined on the third anniversary will be the thirdanniversary, and the current referenced rate will be 7.5%. Thus, underthis alternative, the current referenced rate can never fall; it canonly increase or stay the same.

If the current referenced rate exceeds the base referenced rate, theinterest enhancement will be the difference between the current and basereferenced rates multiplied by the upside participation rate (UPR) (step150 of FIG. 1):i _(E) =UPR(R _(C) −R _(B)).

In a preferred embodiment, the upside participation rate UPR, which maybe 1 (i.e., 100%), is set when the contract is established (step 125 inFIG. 1) and does not change during the guarantee period.

On the other hand, if the current referenced rate does not exceed (i.e.,is less than or equal to) the base referenced rate, the interestenhancement is zero (“0”) (step 140 in FIG. 1).

The total interest rate (i_(T)) is the sum of the base interest rate andinterest enhancement (step 160 of FIG. 1):i _(T) =i _(B) +i _(E).

For each subsequent pre-defined period for the remainder of theguarantee period of the annuity contract, the total interest rate to becredited to the account value for that period is determined by comparingthe current referenced rate to the base referenced rate and adding someportion of any increase over the base referenced rate to the baseinterest rate. (i.e., return to step 50 of FIG. 1). If there should be adecrease from the base referenced rate, the total interest rate for thatperiod will be the guaranteed base interest rate.

As would be readily apparent to persons having ordinary skill in art,the methodology described herein can be implemented using electronicstorage and computing means, whereby the present value of the account,the total interest rate, and the components employed to determine thetotal interest rate are electronically stored, and the interest rate iscomputed and applied to the account value by appropriately programmedcomputer algorithms. The programming of such algorithms to perform themethodology described herein is well within the skill of persons ofordinary skill in the art, and thus a detailed explanation of theprogramming of such algorithms—beyond the detailed explanation of themethodology provided herein—is not necessary.

In a preferred manner of managing the above-described annuity account,certain restrictions are implemented. For example, contract provisionsmay require a $5000 initial purchase payment for qualified contracts(e.g., contracts that are part of an IRA or 401(k) account) and $3000initial purchase payment for non-qualified contracts. Subsequentpurchase payments must be $100 or more. In addition, while the contractholder is allowed to withdraw up to 10% of the account value each yearpenalty free, diminishing surrender charges are assessed for withdrawalsbeyond 10% of the account value according to the following surrendercharge schedule.

Surrender Charge (% of Withdrawn amount Year beyond 10% of AccountValue) 1 9% 2 8% 3 8% 4 7% 5 6% 6 5% 7 4% 8 3% 9 2% 10 1%

Just as each contribution beyond the initial purchase payment, in thepreferred embodiment, commences a new sub-account with its own baseinterest rate, guarantee period, and total credited interest rateschedule, so too is each contribution subject to a ten-year surrendercharge schedule. Surrender changes may be waived in the event ofterminal illness, unemployment, death of the spouse-account owner,confinement to nursing home, or required minimum distributions forindividual retirement accounts.

At the end of five years, the owner is given a 45-day window to withdrawsome or all of the value of the account penalty-free and may renew theannuity contract for any remaining account value (step 100 of FIG. 1). Anew base interest rate will be set, a new guarantee period will begin, anew referenced rate is determined, and a new upside participation rateis set. If the contract holder elects to withdraw all of the value ofthe account, the account is terminated (step 120 of FIG. 1).

The following example, with reference to the table at FIG. 2,illustrates the management of the annuity of the present invention.

John and Mary Smith purchased an annuity on Dec. 9, 2001 with an initialpurchase payment of $15,000. In the example, the referenced interestrate is a specified U.S. Treasury rate, and the base Treasury ratedetermined on the date of purchase is 5% and the guaranteed baseinterest rate (referred to in FIG. 2 as the basic credited rate) set forthe Smiths is 4.75%. For that first year, i.e., until Dec. 8, 2002, theSmiths will receive a total interest rate (i.e., total credited rate inFIG. 2) of 4.75%. On Dec. 9, 2002, the first anniversary of the Smith'spurchase payment, the current Treasury rate is 6%, a 1% increase (i.e.,Treasury upside in FIG. 2) over the base Treasury rate of 5%. In theillustrated example, the upside participation rate, UPR, is 1 (i.e.,100%), so the total credited rate the Smiths will enjoy from Dec. 9,2002-Dec. 8, 2003, will be 5.75%. On Dec. 9, 2003, the current Treasuryrate is 7%, and the 2% Treasury upside is added to the basic creditedrate. Thus, for the year Dec. 9, 2003-Dec. 8, 2004, the Smiths willenjoy a total credited rate of 6.75%. On Dec. 9, 2004, the currentTreasury rate has fallen to 4%, 1% below the base Treasury rate of 5%,for a Treasury upside of 0%. For the year Dec. 9, 2004 to Dec. 8, 2005,the Smiths will still enjoy the guaranteed basic credited rate of 4.75%.That is, the Smiths do not see a drop in their basic credited ratedespite the fact that the Treasury rate has fallen below the baseTreasury rate. On Dec. 9, 2005, the current Treasury rate is back up to6%, and the 1% Treasury upside is added to the basic credited rate.Thus, for the fifth year from Dec. 9, 2005-Dec. 8, 2006, the Smiths willenjoy a total credited rate of 5.75%.

At the end of the fifth year, the Smiths can withdraw the entire valueof the sub-account, or they can renew the sub-account contract for a new(and possibly different) base interest rate for the new 5-year guaranteeperiod.

Although a preferred embodiment is specifically illustrated anddescribed herein, it will be appreciated that modifications andvariations of the present invention are covered by the above teachingsand within the purview of the appended claims without departing from thespirit and intended scope of this invention.

We claim:
 1. A computer-implemented method of administering a financialaccount comprising: determining at a processor a base interest rate tobe applied to the account for a first predefined period; determining atthe processor an initial value for a referenced rate as of an initialdate; applying the base interest rate to the account for the firstpredefined period; determining at the processor a subsequent value forthe referenced rate as of a subsequent date; determining at theprocessor a subsequent interest rate to be applied to the account for asecond predefined period based on a comparison at the processor of thesubsequent value for the referenced rate and the initial value for thereferenced rate, wherein if the subsequent value of the referenced rateis lower than or equal to the initial value for the referenced rate,setting at the processor the subsequent interest rate to be equal to thebase interest rate; and applying the subsequent interest rate to theaccount for the second predefined period.
 2. The computer-implementedmethod of claim 1, wherein the subsequent interest rate comprises anincrease of 100 basis points above the base interest rate.
 3. Thecomputer-implemented method of claim 1, wherein the subsequent interestrate comprises an increase of 200 basis points above the base interestrate.
 4. The computer-implemented method of claim 1, wherein thereferenced rate comprises a United States treasury rate.
 5. Thecomputer-implemented method of claim 1, wherein the referenced ratecomprises a United States constant maturity treasury yield rate.
 6. Thecomputer-implemented method of claim 1, wherein the referenced ratecomprises a United States 10-year constant maturity treasury yield rate.7. The computer-implemented method of claim 1, wherein the referencedrate comprises an averaged rate.
 8. The computer-implemented method ofclaim 1, wherein the financial account comprises an annuity account. 9.The computer-implemented method of claim 1, wherein the first predefinedperiod is five years and the second pre-defined period is subsequent tothe first predefined period.
 10. A computer-implemented methodcomprising: determining at a processor and electronically storing in anelectronic storage a first interest rate for a financial account;receiving at the processor and electronically storing the electronicstorage a first value for a referenced rate as of an initial date;receiving at the processor and electronically storing in the electronicstorage a second value for a referenced rate as of a subsequent date;and determining at the processor and electronically storing in theelectronic storage a second interest rate for the financial account bycomparing the second value of the referenced rate as of the subsequentdate to the first value of the referenced rate as of the initial date,wherein: (A) if the second value of the referenced rate as of thesubsequent date is less than or equal to the first value of thereferenced rate as of the initial date, setting at a processor thesecond interest rate to the first interest rate, and (B) if the secondvalue of the referenced rate as of the subsequent date is more than thefirst value of the referenced rate as of the initial date, determiningat a processor an interest enhancement based on the comparing of thesecond value of the referenced rate as of the subsequent date to thefirst value of the referenced rate as of the initial date and setting ata processor the second interest rate to be the sum of the interestenhancement and the first interest rate.
 11. The computer-implementedmethod of claim 10, wherein the interest enhancement comprises 0%. 12.The computer-implemented method of claim 10, wherein the interestenhancement comprises 100 basis points.
 13. The computer-implementedmethod of claim 10, wherein the interest enhancement comprises 200 basispoints.
 14. The computer-implemented method of claim 10, furthercomprising applying the first interest rate to the account.
 15. Thecomputer-implemented method of claim 10, further comprising applying thesecond interest rate to the account.
 16. The computer-implemented methodof claim 10, wherein the first interest rate comprises 0%.
 17. Thecomputer-implemented method of claim 10, wherein the referenced ratecomprises a United States constant maturity treasury yield rate.
 18. Acomputer-implemented method of administering a financial account,comprising: determining at a processor a first value of the financialaccount; setting a first credited rate; determining at the processor afirst referenced financial value of a first plurality of investmentinstruments as of an initial date; determining at the processor a secondreferenced financial value of a second plurality of investmentinstruments as of a subsequent date; and determining at the processor asecond credited rate based on a comparison between the first referencedfinancial value and the second referenced financial value; wherein ifthe second referenced financial value is less than or equal to the firstreferenced financial value, setting at the processor the second creditedrate to be the same as the first credited rate.
 19. Thecomputer-implemented method of claim 18, wherein the first credited ratecomprises 0%.
 20. The computer-implemented method of claim 18, whereinthe first plurality of investment instruments are treasury instrumentsand the second plurality of investment instruments are treasuryinstruments.
 21. The computer-implemented method of claim 18, whereinthe first plurality of investment instruments are equities and thesecond plurality of investment instruments are equities.
 22. Thecomputer-implemented method of claim 18, further comprising applyingthrough a processor the second credited rate to the financial account.23. The computer-implemented method of claim 18, wherein the financialaccount is an annuity account.
 24. The computer-implemented method ofclaim 18, wherein the first plurality of investment instruments is thesame as the second plurality of investment instruments.